Warning: don't swop your Lafite for carbon credits!

There is a new scam around: wine investors being told that the bottom has fallen out of the fine wine market, so it makes sense for you to sell you Lafite, Latour etc. for Carbon Credits. 

Actually it does not make any sense as your Lafite is always likely to be more valuable long-term, even if its value has fallen over the last 18 months or so, than a carbon credit that may well not be worth the paper it is printed on.  

I expect to be able to post more details soon.   

Fine wine prices falter in August

Start of a trend or a temporary blip? This is the first significant downturn since the latest steady growth curve started in January 2009.

From the  Liv-ex blog:

'Lafite: The force behind last month's losses

The Liv-ex Fine Wine 100 Index lost four per cent in August - its third-most dramatic monthly fall since its inception in 2001. Though the majority of index constituents performed poorly - most notably the First Growths - the real millstone was Lafite Rothschild.

Read the rest of the post here.

See also brief article in the FT 

Some analysis in Harpers here.

Lafite: time to sell?

A couple of interesting articles here:

Andy Xie, an ex-Morgan Stanley: 'Sell Lafite now'


Liv-ex blog: Time to sell Lafite?

Eighteen55 Clarets Ltd offer 2009 Lafite already

Eighteen55 Clarets Ltd: premises in Forest Hill, London SE23

The Enquiry

I received this enquiry from DC about buying 2009 Lafite yesterday afternoon:

'I was reading your website with interest, doing a bit of background research, after being cold-call telephoned by Eighteen 55 clarets. I haven't invested in wine before but the person on the end of the phone was very plausible and persuasive. He first contacted me in February, when I said I wouldn't want to invest. But he contacted me again yesterday, again sounding very plausible. He wanted me to invest around £5,000 in an en primeur case. I think it was a lafite rothschild (at least it was the first time he rang me). He said that it was almost guaranteed to grow within the first 2-3 months, and if I wanted to sell after that I could. Or I could wait till it had matured for the 2 years after which it would be bottled.'

My response 

Eighteen55 Clarets Ltd was founded on 23rd June 2008 and the current registered office is at 61 Waldram Park Road, London SE23 2PW – the offices of the Forest Hill branch of estate agents, Next Move. Its sole director is Altaur Rahman (DOB: 16.4.1973) of Catford. The company's first set of accounts are now just slightly overdue (since 23.3.2010). 

They are offering 2009 Lafite en primeur before the château has released its opening price – unlikely to happen before the end of May and pretty likely not to be until June. Nobody yet knows what you are going to have to pay for 2009 Lafite, which is likely to be in great demand whatever score it gets from Robert Parker. A very good Parker score will probably only push the price further into the stratosphere given the likely interest both from the Chinese and from investors. If this turns out to be the case, then can Eighteen55 Clarets be sure that they can secure stocks of this wine?          

I trust that the salesman made it clear how speculative a purchase this would be – unknown price and with no guarantee of getting the wine. The company's terms and conditions do quite properly make it clear that: 'Eighteen 55 CLarets is a non-stockholding retailer which means the wines listed are subject to availability.'

My advice
Even from a very well established merchant I would be wary of buying 2009 Lafite before the price has been released and not being certain of being able to secure this wine, especially as allocations to merchants are likely to be very small. As Eighteen55 Clarets were established in June 2008 they have no real track record over supplying Bordeaux en primeur. I would advise against buying en primeur from Eighteen55 Clarets Ltd.